Detroit retirees at risk of losing their pensions

Detroit’s bankruptcy is being watched closely by cities across the nation because there’s one problem that a lot of them share with the Motor City: a lack of funds for health care and pensions promised to retired police officers, firefighters and other city workers. NBC’s John Yang reports.

Politics

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>>>now to
detroit
and the largest city bankruptcy? i
u.s. history
, which is now being watched so closely by cities across this country because there's a problem a lot of them share, huge gaps between the amount of money they have already
set aside
for pensions and the amount of money they have actually promised retired city workers. nbc's
john yang
reports.

>> reporter: john day
was a
detroit
cop for more than 26 years. he worked long hours and went years without raises in return for the promise of reliable retirement income. now that pension, $2900 a month, is at risk.

>>if these cuts go through it will destroy my retirement. i have to try to find a full-time job with benefits that, you know, aren't in abundant supply.

>> reporter: like many state and city workers across the country, he is not eligible for
social security
. in
bankruptcy court
, day and other retirees are just another creditor fighting for a piece of a very small pie.

>>i feel betrayed. i think all the retirees feel betrayed.

>> reporter: problem's not limited to
detroit
. like a lot of households, states and cities don't always
set aside
enough money for the future. a new
boston college
study finds that nationwide, state and local governments have promised workers about $1 trillion more in retirement benefits than they are able to pay.

>>a lot of cases, these increased costs, these poor-funded ratios are a product of poor funding in the past and not so much that plans promised exorbitant benefits.

>> reporter: according to the
pew research center
, 34 states have
pension fund
short shortfalls of 20%er. the worst, illinois, which has left les than half what it needs. the same day
detroit
filed for bankruptcy, the
bond rating
service you can moody's, downgraded
chicago
's
credit rating
to negative. among the reasons, extremely underfunded pension plans and the political barriers to
pension reform
.

>>what
chicago
gets from
detroit
is the opportunity to see what happens when you don't address the problems when you still have a chance.

>> reporter: something that leaders in states and cities across the nation will likely look at very closely.
john yang
, nbc news,
chicago
.